Why Did SEC Reject Grayscale Bitcoin ETF?

Today, we will examine in detail why the SEC rejected the Grayscale Bitcoin ETF and what the Bitcoin ETF is.

Why Did SEC Reject Grayscale Bitcoin ETF?

First, let’s take a look at why the SEC rejected the Grayscale Bitcoin ETF. The SEC cited that Grayscale’s proposed spot bitcoin ETF did not meet the required standards to prevent fraud and manipulation as the reason for its rejection. The SEC had previously rejected Bitwise’s application for a spot Bitcoin ETF on similar grounds. Following this decision, Grayscale filed a lawsuit over the rejection of the spot bitcoin ETF, requesting the U.S. District Court of Appeals to review the SEC’s decision.

What Did Grayscale Respond to?

Investment firm Grayscale announced earlier this year that they are ready to sue the SEC in case of rejection of the Bitcoin ETF and that they will file a lawsuit under the Administrative Procedures Act. As expected, Grayscale sued the SEC for Bitcoin ETF rejection. Grayscale CEO Michael Sonnenshein said: “Our product supports the SEC’s mandate to protect investors, maintain fair, orderly and efficient markets, and facilitate capital formation. We are deeply disappointed with the SEC’s decision to continue to block the issuance of spot Bitcoin ETFs.” used the expressions.

ETFs Rejected by the SEC

So how has the SEC previously responded to other investment firms’ ETF applications? The SEC also rejected Van Eck’s spot Bitcoin ETF, the same reasoning it previously offered for rejecting the Grayscale Bitcoin ETF. According to the SEC, this Bitcoin ETF had shortcomings in preventing “fraud and manipulative” practices. In December 2021, the SEC also rejected the asset management company WisdomTree’s Bitcoin ETF application, again giving the same reasons.

What Was The First ETF Approved?

So, is there no SEC-approved Bitcoin ETF? Being the first Bitcoin ETF approved by the SEC, ProShares’ Bitcoin Futures ETF was approved in October 2021.

So What Is a Bitcoin ETF?

Mutual funds that track the value of Bitcoin and are traded on traditional market exchanges rather than cryptocurrency exchanges are called Bitcoin ETFs.